Analyzing the Brics Situation … Case Study

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BRICS nations are made up of Brazil, Russia, India, China and South Africa. The nations have become increasingly significant in international business for the reason that they are not only the fastest growing markets but also the biggest emerging markets. These nations, in the next two decades or so are considered to be the ones that will have the most thriving economies, booting the United States to fifth place. In general, the BRICS make up for roughly three billion people, or simply just below 50% of the total population of the world. In addition, in the contemporary, the BRICS have also made significant contributions to the majority of the Gross Domestic Product (GDP) growth of the world, approximately $14 trillion and just about $4 trillion of foreign exchange reserves. All of these five nations are efficaciously a sub-regional leader.

Brazil

In accordance to Statistics, the total population of Brazil as of 2013 was 2012 million, which makes the country to be the sixth most populated nation in the world. In addition, the country's growth rate of 2.5% every year ranked it as the seventh biggest economy and more so the biggest one in Latin America as it had a GDP of $2.3 trillion. The projections made indicate that by the year 2020, Brazil will be ranked as the fifth biggest consumer market globally, surpassing nations such as the United Kingdom (Khan et al., 2015). In the contemporary, the nation's competitive edge consists of growth, both socially and economically, together with stability and having a sustainable environment. In addition, Brazil has a strong social and macroeconomic structure, is affluent in natural and traditional resources, as well as pure and plentiful renewable energy. The main advantage of Brazil is that the nation is one of the most valued energy exporters in the global scene. Actually, it is one of the key world providers for oil supply. Brazil is also the biggest producer of iron ore (Khan et al., 2015). It is also well endowed in vast minerals, for instance, diamonds, gold, platinum, nickel, manganese and tin. At present, the country is focusing on growing and advancing its oil fields to become the biggest oil producer amidst the non-OPEC nations (Apex Brazil, 2016). Owing to these numerous prospects for investment in the nation as well as accessible natural resources, several multinational corporations have started investing or have an endeavor to invest in the economy of Brazil. For instance, according to Trading Economics (2016), the foreign direct investment (FDI) of Brazil increased by $6,800 million in the month of April 2016.

Russia

Russia is the biggest nation in the world with regard to land and terrain with vast natural resources. In addition, the country has a workforce that is highly educated and has scientifically advanced research and production proficiencies. The consumer market of Russia currently stands at just over 144 million people and has immense growth prospects for high purchasing power parity of the developing income for the middle-class (Euromonitor, 2016). Since President Vladimir Putin came into power, the GDP of Russia more than doubled, rising from being the 22nd biggest in the globe to the 8th largest. Russia boasts of having the world's leading natural gas reserves, second biggest coal reserves, and the eight biggest oil reserves that are 20%, 18% and 5% in that order of the total world reserve. Taking this into consideration, Russia has the prospect of becoming one of the biggest and leading exporters of hydrocarbon in the world. Adding to its richness in minerals, Russia makes up 25% of the total diamond production value in the world (Khan et al., 2015). Foreign Direct Investment (FDI) inflow has been experiencing an exponential growth since 2005, in a number of sectors, for instance, real estate, power generating sectors and also the automotive industry. In accordance to Trading Economics (2016), in the 2013 fiscal year, Russia came to be the third biggest receiver of FDI flows in the world. In this particular year, the nation saw an astounding 83% increase, in comparison to the previous financial year. Towards the end of 2015, the FDI of Russia increased by $52 million (Trading Economics, 2016).

India

In the contemporary, India is ranked as the tenth biggest economy in the world on the basis of exchange rates in the market. Nonetheless, on the basis of purchasing power parity (PPP), the Indian economy is ranked third in the world. In terms of population, India is ranked second with a population of over 1.2 billion people. A great advantage of the nation is that more than half of its population is aged below 25 years. In addition, its labor force is vastly skilled in Science, Technology, Engineering, and Mathematics (STEM). It is projected that the GDP growth rate of the nation will increase by about 9 to 10% every year for the next decade and in the subsequent two decades, the GDP of the nation will grow about five times with the GDP per capital almost growing four-fold (Khan et al., 2015). In addition, India's government is taking several footsteps to further embolden private and foreign investments, for instance, decreasing the longstanding capital gains rate by 20%, modifying the exchange control guidelines that were beforehand pertinent to businesses having substantial foreign contribution with a view to freeing and easing up the Indian market (Khan et al., 2015).

China

A great deal of the growth and development of BRICS nations is reliant on China as the nation is significantly bigger than the other four nations with regard to population numbers and also GDP. In particular, the Chinese economy is ranked second in the world with regard to Gross Domestic Product and Purchasing Power Parity. In accordance to statistics, in the 2014 fiscal year, the GDP of the Chinese economy was worth $9,240.27 billion and this constituted about 15% of the total world economy. China is ranked as second behind the United States with regard to trading, by being the biggest exporter in the world, and second largest importer (Khan et al., 2015). More so, China has continued to progress in the direction of a more advanced free market system. In accordance to Khan et al. (2015), China has a massive unexploited market on the whole with the proof that, in the past 25 years or so leading to 2010, the foreign direct investment of China for every year rose from merely less than $2 billion to approximately $100 billion. Taking this into account, it has proven China to be largely appealing and also the safest destination for attaining greater returns on investment. In the contemporary, the Chinese government has instigated a number of economic reforms, and an inclusion of this strategy, China plans to get rid of price controls on majority of products and also embolden investors to capitalize on this sector. In addition, China expanded coastal expanses, open municipalities, and development regions to examine more free market reforms and to offer tax and trade enticements for investment from foreign nations. In particular, these incentives for trade and investment have been amplified and as a result have instigated FDI to be the cause for the nation's capital growth in the past number of years (Khan et al., 2015). In accordance to Trading Economics (2016), the FDI of China averaged 415.92 USD HML from 1997 up until 2016, getting to an unprecedented high of 1262.70 USD HML in December 2015.

South Africa

South Africa is considered the powerhouse of investment in the African continent. Its excellent infrastructure, research proficiencies, modernization, and recognized manufacturing base cause it to be one of the most rewarding investment destinations. In addition, South Africa has had an extensive period of party-political and macroeconomic constancy, transparent uniformity framework, and a proper supply of skilled workforce. South Africa is also a very affluent nation with regard to having immense natural resources, that consist of gold, coal, platinum, iron ore, manganese nickel, uranium and chromium, and the nation revels in auspicious consideration from multinational oil corporations (MNC), particularly for its very valuable oil and gas sector (Khan et al., 2015). Subsequent to linking together with the BRICS alliance, South Africa has improved its standing to have more inflow of FDI. At the outset of 2014, FDI flow in South Africa was relatively substantial at 2.32 million and in the 2014 fiscal year, the FDI inflow of South Africa stretched to 8.1 billion (Khan et al., 2015).

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